Projecting jobs growth from capital investment.

• Author: Powell, Philip T.

When faced with the potential for new business investment, one of the most important questions for economic developers is how many jobs will be created because of the investment. The answer to this question has wide-ranging implications, from the incentives the state will offer the investing company to the number of new degree-earners local universities should graduate in the next five to ten years. Talent is the new currency of regional economic prosperity. A region becomes more competitive if it can more precisely predict workforce needs and more proactively develop the talent that employers will hire.

State economic development organizations rely on the companies themselves to provide job figures, as well as economic modeling to generate estimates of the jobs that will be created or retained because of the investment. This requires trust that the company is providing good-faith and accurate job estimates, as well as modeling expertise from the economic developers. The challenge for both parties is the relative lack of information and inherent uncertainty about the impacts of the investment. The availability of data determines the model that can be built. The industries that drive a regional economy and the occupational groups that fill their jobs can be very specific. Modeling is often hampered by a lack of industry and occupational detail within government data sets offered at a regional level.

Stronger techniques for regional workforce prediction can strengthen a state's ability to set economic strategy, formulate policy and recruit new investment. This article offers a blueprint for predicting detailed job impacts by industry and occupation given a new capital investment. Higher levels of precision help state policymakers better align business recruitment, tax incentives and infrastructure investment decisions with the capacity of a region to develop and attract the talent that local companies need.

Motivation for the model

A company's projection of job creation from a given investment can be highly subjective and politically motivated, especially when there is negotiation with local and state authorities for tax benefits and new public assets. Methods used to predict additional employment are not consistent from one project to another. While economic developers can use economic modeling software such as IMPLAN to make their own projections, for the most part, they take companies at their word in their projection of employment...